Ipsos Encyclopedia - Concept Testing

​A concept test is the stage in the product development process where a detailed description of a product (and its attributes and benefits) is presented to prospective customers or users, to assess their attitudes and intentions toward the product.

Ipsos Encyclopedia - Concept Testing

Definition

​A concept test is the stage in the product development process where a detailed description of a product (and its attributes and benefits) is presented to prospective customers or users, to assess their attitudes and intentions toward the product.

Concept testing is most often used during the development stage to test the success of a new product idea before it is marketed. Concept analysis is often used as one step in the process of providing 'proof of concept.'
(Smith and Albaum, 2010).

Concept tests provide the direction and guidance necessary to identify and communicate key product and service benefits and uses, as well as product specific implementations such as packaging, advertising, sales approaches, product information, distribution, and pricing.

Concept tests identify the perceptions, wants, and needs of the product and service users and decision makers. You can integrate each of these dimensions into a concept test survey.

A variety of concept testing survey formats are available to implement. Each helps to minimise risk and maximise revenue when introducing all types of goods and services to the market.

Action Standards are sometimes set by clients (mainly Blue Chip companies) in order to qualify to the next stage of the NPD process.

The value of concept testing

Concept tests shape and refine ideas so they have greater potential for market acceptance. Specifically, concept tests:

  • Assess the absolute or relative appeal of alternative product ideas/configurations/positions
  • Indicate concentrated segments of the population to which the product appeals
  • Provide necessary information for developing the product and its promotion, distribution, and pricing

Concept testing provides insights for designing a more optimal product or service. Furthermore, the success of new product ideas can be tested before being marketed. Concept tests are best conducted when the concept has been developed to the point that it conveys the product attributes, the desired positioning and the intended brand personality. Actual product concept tests evaluate the core concept through exposure to a story board, sketches, graphics, or even a product mock-up.  See definitions of Concept Board and Concept Statement for more details.

Another very important function of concept testing is to mitigate financial risks to the manufacturer. It would cost too much to develop every idea into a product, and launching a product that fails can result in huge financial losses. Concept testing allows manufacturers to focus their new product efforts on the ideas that have the most potential to succeed in market.  Thus the term concept test is also sometimes thought of as a 'proof of concept,' which refers to market viability and market share projections that are often required for capital funding.  See definition of Forecasting for more details.

In summary, concept tests have the ability to improve the product and increase the product-market match while mitigating the financial risks for the manufacturer.

Different approaches to concept testing

A variety of concept test approaches exist. Each has a different objective and can provide a variety of benefits. Here are the most important of these approaches.

1. New Product Concept Tests. Identify the benefits most important to customers and the features that are most likely to lead to the fulfilment of that promise. Features can be categorised into 'need to haves' and 'nice to haves.' Customer needs must be identified and prioritised for product development and communicating to the market.

2. Restage Tests. Reformulations, modifications, and upgrades can add new life to existing products and services. Here identifying the optimal bundle of features is a priority. Differentiating and timing the release of new features that are 'need to haves' vs. 'nice to haves' is critical in creating products and services that are truly 'New and Improved' and are 'New Release' and 'Upgrade' worthy.

3. Positioning Tests. Holding the offer itself constant, but varying the language used to describe the offer and understanding consumer reactions, is at the heart of a positioning test.  Though not the same as advertising, more often than not a positioning test is a precursor to advertising development.

4. Migration Path Tests.  Many products and services offer upgrade or migration paths. For the customer, this is an alternative to the next new thing. Understanding the key features and benefits is critical in mapping consumer needs to the likelihood of upgrading an existing product or adopting a new technology. 'Do benefits outweigh the costs and challenges of changing?' Features, Benefits, Brands, Image, Costs, and Training are but a few factors to consider.

5. Pricing and Incentives Tests. No one underestimates the importance of price expectations in new product adoptions. Price, incentives, bundling, cross product tie-ins, and cost mitigating factors, such as warranties and use agreements all change price perceptions and perceptions of value. Pricing and incentive tests determine the optimal pricing point for new product concept bundles and can estimate customer price acceptability curves.

Ipsos Point Of View:

​The Ipsos Marketing Approach

The core USP of the Ipsos Marketing's concept testing offer, the thing that truly sets our approach apart from others, is the application of competitive context. This approach best aligns with well-established principles of psychology, behavioural economics, and human decision making – thus best representing the real world decisions that consumers will make.

In a typical concept test by our competitors, consumers see a new product idea in isolation and indicate their willingness to purchase the item without any reference to other available products or the product(s) they might currently use to fulfil that need. Those results are then typically compared to a database of other concepts in that category (all of which were also evaluated in isolation without any reference to existing products – and many of which were never launched as actual products) to determine whether or not the results are 'good.'

Of course in the real world consumers aren't evaluating products in isolation. For most categories, consumers already have a product or products which they currently use.  So when consumers see a new product on the shelf, they are comparing it to the product(s) that they are currently buying.  They are asking themselves– does this new thing meet my needs better or worse than what I currently use?  Is it different from what I buy today? How does it compare in price?

Ipsos consistently leverages competitive context to assess competition, and builds that context directly into our surveys.  Specifically, we ask the consumer to define the competition during the concept screening survey by asking the Most Often Purchased Product – what we call the M.O.P.P. Then, we ask the consumer to compare the M.O.P.P. to the test concept on key measures for benchmarking purposes. This M.O.P.P.-based benchmark reflects the competition the innovation will face in the real world.

This technique is the genesis of a benchmarking system that reflects competition better than historical databases. Specifically, we have found that for any given key measure (for example, Relevance), the relationship between a test concept and a M.O.P.P. is very similar regardless of country, category, data collection methodology, or sample. This finding has an important implication for CPG innovation: The relationships between the test concept and the M.O.P.P. from concept screening studies from around the world can be combined into one global relational database that reflects reality better than historical databases.

Our global relational database contains measures that reflect comparisons of test products to the M.O.P.P. We account for country and category for every case we enter into the database, instead of splicing together country and category after the cases have already been input.

Our relational database offers key advantages over historical databases:

  • It reflects consumer-defined competition
  • It includes only launched products
  • It is not limited by country and category definitions – therefore, having a limited number of cases or a biased set is not an issue

The information above is more directly related to the testing of CPG products.  When faced with other types of products (durables, services, etc.) we do tend to rely on a more traditional Purchase Intent and historical database approach, though the analysis is more multi-dimensional than our key competitors.  Even within non-CPG tests, Ipsos still incorporates competitive context by ensuring that a variety of recently launched innovations are contained within that historical database.

RED: Our Key Metrics

In terms of key metrics, we use Relevance, Expensiveness and Differentiation (or, as we refer to them, the RED measures) across the entire new product development process – from concept development to full simulated test markets and post-launch performance evaluation.

Leveraging these three measures throughout the concept evaluation process, as opposed to relying on Purchase Intent, results in better decisions about which concepts should be pursued. Ipsos Marketing conducted extensive R&D that demonstrates that Relevance, Expensiveness and Differentiation avoid two pitfalls inherent to Purchase Intent. Specifically:

  1. The RED measures are less sensitive than Purchase Intent to executional differences in concepts. Executional differences relate to elements in the concept not directly associated with the insight or benefits, such as package image and price.
  2. Unlike Purchase Intent, the RED measures do not favour familiar concepts (in essence, line extensions) and do not overlook promising niche and breakthrough ideas – which often generate higher profits than line extensions.

The RED measures not only avoid these pitfalls, but can also be used as diagnostic tools to uncover what drives concept performance. Armed with this information, marketers can take specific actions to improve concept performance. For example, a concept that performs high on Differentiation but low on Relevance can be reworked to better address consumer needs or can be evaluated among a different target audience. On the contrary, Purchase Intent is an outcome measure that provides only an end result – the answer to whether or not the consumer is interested in buying the product. As such, Purchase Intent cannot be used by marketers to determine which drivers can be changed to improve concept performance.

Other Advantages

In addition to the above, there are other things that help make our approach different from the competition and more insightful for our clients:

  • Innovation Archetypes. Essentially a segmentation of concepts, the Innovation Archetypes allow us to evaluate a concept in a less 'traffic light' manner to understand consumer perceptions and the role that the concept might play in a manufacturer's portfolio (e.g. breakthrough, me-too, etc.)
  • Concept Evaluator. Most suppliers have a 'highlighter' tool that allows consumers to provide feedback on which specific words and phrases in the concept are received positively or negatively. What distinguishes the Ipsos approach is that we are the only supplier to have norms for this type of data – including norms for different concept elements (e.g. benefit, insight, etc.).
  • Incrementality. Incrementality is often a key issue in new product development and many suppliers have an approach to measure it. What distinguishes the Ipsos approach is that it is more sensitive (using a chip game allocation rather than substitutability) and we can also provide norms on the level of incrementality based upon parent brand size.
  • Perceptor. Perceptor is an add-on module that determines which product attributes (e.g. safety, efficacy, taste, etc.) are most important in the category in general, as well as how the test concept is perceived on those dimensions as a diagnostic for optimisation. The results can also be incorporated into forecasts and simulators to understand the impact of changes in perception of the attributes

Recommended readings:

What Is Concept Test? Definition and Meaning in BusinessDictionary.com.

Concept Testing 101: How to Laser Focus Your Products and Priorities by Scott Smith (Qualtrics, 2013).  

Code RED - The Best Measures for Choosing High Potential Consumer Goods Concepts

Creating Winning Concepts

Harnessing the Power of Language - Four Rules for Writing Great Concepts

How well do you really know your Concept?

Ipsos InnoQuest - PI Losing Appeal: POV

Ipsos - Marketing Concept Databases: POV 

Ipsos - What's a nice insight like you doing in a Concept like this?: POV 

Ipsos Marketing - To be the best you've got to beat the best: POV

Taking a fresh look at measuring trial potential for Consumer Packaged Good Concepts

Consumer & Shopper